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154.25-030 Jobs retention project agreement -- Requirements, limitations, and
permitted inducements.
(1)
The authority, upon adoption of its final approval, may enter into, with any
approved company, an agreement with respect to the jobs retention project. The
terms and provisions of each agreement, including the amount of approved costs,
the amount of the inducement, the job maintenance requirement, and any limitations
the authority may deem necessary, shall be determined by negotiations between the
authority and the approved company, except that each agreement shall include the
following provisions:
(a) The amount the approved company may recover through inducements under
this subchapter for the initial project, which shall be a negotiated percentage
not to exceed fifty percent (50%) of eligible costs. However, the authority may
negotiate an increase in the percentage such that both the initial project and
any supplemental projects are eligible for seventy-five percent (75%) of
eligible costs upon approval of a supplemental project. The adjustment to the
initial project shall be made on the total approved costs and any credits taken
prior to the addition of a supplemental project shall then be subtracted from
that increased amount of approved costs. Neither the initial project nor any
supplemental project shall ever be eligible for inducements greater than
seventy-five percent (75%) of the eligible costs. The authority shall negotiate
a maximum allowable inducement for each year of the agreement, and the
approved company may not recover inducements above that maximum in any
year during the term of the agreement, except that the annual maximum
allowable inducement may be exceeded if a carry-forward of unused
inducements from previous years exists. Any carry-forward of unused
inducements will lapse upon maturity or termination of the agreement;
(b) A provision that sets the activation date for the initial project within three (3)
years of the final approval. Prior to the activation date, the authority may
extend the time for the completion of the jobs retention project and
compliance with the required investment upon request of the approved
company for good cause; however, the ten (10) year period for the term of the
agreement shall begin from the activation date. No inducements from the jobs
retention project shall be available, other than the transferred credits provided
for under subsection (2) of this section, until activation. Upon activation, the
balance of transferred credits shall expire;
(c) A provision that states that within three (3) months of the completion of the
jobs retention project, the approved company shall document the actual cost of
the project in a manner acceptable to the authority. The authority may employ
an independent consultant or utilize technical resources to verify the cost of
the project. The approved company shall reimburse the authority for the cost
of the consultant;
(d) A provision that establishes a minimum required number of full-time jobs that
must be maintained at the site of the jobs retention project and filled with
residents of the Commonwealth subject to Kentucky income tax and states
(2)
that the authorized inducements may be suspended at the discretion of the
authority from the date of noncompliance until the date compliance is
reestablished if the approved company's employment falls below the
established minimum employment requirement. If the company does not
increase the number of full-time employees at the site who are residents of the
Commonwealth and subject to Kentucky income tax sufficiently to meet the
minimum employment requirement within one (1) year from the date of the
initial suspension, the remaining unused inducements may be terminated at
the discretion of the authority;
(e) A provision that gives the authority discretion to suspend or terminate the
authorized inducements for any failure to comply with the terms of the
agreement; and
(f) A provision that provides the term shall not be longer than the earlier of:
1.
The date on which the approved company has received inducements or
withheld assessments equal to the amount that the company may recover
under paragraph (a) of this subsection; or
2.
Ten (10) years from the activation date.
However, the term may be extended to a period longer than ten (10) years
upon the addition of a supplemental project as negotiated and approved by the
authority.
In consideration of the execution of the agreement, during the time the agreement is
in effect, which time shall commence on the date of the agreement, the approved
company may be permitted the following inducements:
(a) Beginning on the effective date of the jobs retention agreement, which shall
also be the date of final approval, if the approved company has a balance of
unused approved costs on a previously existing and active incentive
agreement approved by the authority pursuant to KRS Chapter 154, the
approved company may impose wage assessments on employees whose jobs
are at the facility where the project defined in the previously existing incentive
agreement was located. The wage assessments may be imposed as provided in
KRS 154.25-040, and shall be available in an amount up to the balance of
transferred credits from the previously existing project.
1.
The transferred credits shall only be available to the approved company
until the activation date, the term from the original incentive agreement
expires, or the balance of transferred credits is exhausted, whichever
occurs first; and
2.
Should the approved company exercise this option, the incentive
agreement from which the credits were transferred shall be terminated
upon transfer and all parties shall be released from their obligations
thereunder.
(b) After the activation date:
1.
A one hundred percent (100%) credit against the taxes imposed by KRS
141.020, 141.040, and 141.0401 that would otherwise be owed by the
(c)
(d)
(e)
(f)
approved company, in the approved company's taxable year, as
determined under KRS 141.402, on the taxable income, Kentucky gross
receipts, or Kentucky gross profits of the approved company generated
by or arising from the jobs retention project. The ordering of credits
shall be as provided in KRS 141.0205;
2.
The aggregate assessment withheld by the approved company as
provided in KRS 154.25-040 in each year after the activation date;
The tax credits allowed to the approved company shall be equal to the lesser
of the total amount of the tax liability or the amount that the company may
recover under subsection (1)(a) of this section that has not yet been recovered,
reduced by any recovery through the collection of assessments subject to the
annual maximum inducements authorized pursuant to subsection (1)(a) of this
section. The credit shall be allowed for each taxable year of the approved
company during the term of the agreement and for which a tax return of the
approved company is filed until the amount that the company may recover
under subsection(1)(a) of this section has been received through a
combination of credits and assessments, if the company elects to impose
assessments. The approved company shall not be required to pay estimated tax
payments as prescribed under KRS 141.044 or 141.305 on income, Kentucky
gross profits, or Kentucky gross receipts from the jobs retention project. One
hundred eighty (180) days after the filing of the tax return of the approved
company, the Department of Revenue shall certify to the authority the state
tax liability for the preceding taxable year of the approved company and the
amount of any tax credits taken pursuant to this section;
Prior to execution of the agreement, the eligible company shall secure from all
local governmental authorities responsible for collecting local occupational
license fees a resolution or order of the local governmental entities
acknowledging and consenting to the termination or partial termination of the
receipt of local occupational license fees on wages subject to the agreement
paid by the approved company on behalf of its employees to the local
government entities;
If more than one (1) local occupational license fee is imposed upon the
employees of the approved company, the assessment imposed upon the
employees shall be credited against the local occupational license fee and shall
be apportioned to each local occupational license fee according to each local
occupational license fee's proportion to the total of all local occupational
license fees for such employees. No credit or portion thereof shall be allowed
against any local occupational license fee imposed by or dedicated solely to a
local board of education; and
If, in any taxable year of the approved company during which the agreement is
in effect, the assessment collected from the wages of the employees exceeds
the expended portion of the amount that the approved company may recover
under paragraph (a) of this subsection, or exceeds the annual maximum
negotiated by the authority, the assessment collected from the wages of the
(3)
employees shall cease for the remainder of that taxable year of the approved
company. The approved company shall resume normal personal income tax
and occupational license fee withholdings from the employees' wages for the
remainder of that taxable year, and the approved company shall remit to the
Commonwealth and applicable local jurisdictions their respective shares of
the excess assessment collected on the withholding filing date for employees'
wages next succeeding the first date when the approved company collected
excess assessments.
The jobs retention agreement and inducements available pursuant thereto shall not
be transferable or assignable by the approved company without the expressed
written consent of the authority.
Effective: July 12, 2012
History: Amended 2012 Ky. Acts ch. 23, sec. 2, effective July 12, 2012. -- Created
2007 Ky. Acts ch. 91, sec. 3, effective March 23, 2007.
Legislative Research Commission Note (3/23/2007) Although subsection (1)(b) of
2007 Ky. Acts ch. 91, sec. 3 refers to "transferred credits provided for under Section
3 of this Act, "it appears from context and on advice of the drafter that the reference
should have been to "transferred credits provided for under subsection (2) of this
section." The Reviser of Statutes has made this change pursuant to KRS 7.136.
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